• US stocks are called to open higher
  • US500 testing 2740 resistance level
  • Automakers expected to rise on China’s tariff relief 

US stock markets are expected to kick off the afternoon session on the front foot with futures pointing at a higher open. The US500 has made steady gains so far today with price revisiting the region around Monday’s high of 2739. This is an area that traders will likely keep a close eye on with it also coinciding with last week’s high and offering potential resistance. A failure to move decisively above 2740 could see the bears have another attempt at closing the large gap higher from Friday’s close of 2712. 

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 US500 is testing potentially key resistance around 2740 ahead of the US open. Source: xStation

A smaller gap higher was seen at the start of last week, but notice how the gap was promptly filled within the first day’s trade. A failure to fill the latest gap would be a very bullish development and could see it turn into a breakaway move if the market can take out 2740. We can also observe how the market volatility picked-up sharply after the Wall Street open on Monday, as you’d expect with the cash traders entering. 

We earlier noted that automakers were performing well in Frankfurt, with BMW, Daimler and Volkswagen all rising on news that China is said to cut its import duties on passenger cars to 15% from 25% previously. This story is also having an effect in the US, with pre-market trade in both GM and Tesla indicating that they are also set for gains on the open. China is a big market for these firms with GM selling more than 4m cars in China last year while Tesla doubled its revenue from China to $2b in 2017.  

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 Despite calls for a stronger open Tesla remains in a longer term downtrend with the market showing a death cross (50 SMA moving below 200) last year. Source: xStation